A Closer Look at Advertising Industry Optimism in Argentina

Forecaster Says Things Are Looking Up -- Just Not Right Now

Earlier this month, the Argentine Chamber of Media Centrals (CACEM) disclosed the results of its "Confidence and future expectations index."

The first installment of this new index, designed to track the mood in advertising and marketing executives' hearts and minds, shows, surprisingly enough, hope for recovery in the incoming months. The report's headline: "Optimism in the marketing and advertising industries."

To many, this is an odd statement.

Even if international markets have begun to show some signs of resuming profitable activity, there has been no local indication of the same. The country's economy is stalled in such a way that the federal government recently decided not to adjust the nation's time zone to GMT +2 for the summer, "given the fact that industrial production will not exceed electrical demand in the summertime, making a reduction of domestic electric consumption useless," as Federal Planning Minister Julio De Vido noted.

In other words: China and India are not resuming their large purchases of soy produce; the local-goods market is still shrinking; credit is scarce and expensive; industrial production will not recover for the time being; and the long-standing tax conflict between the government and rural producers, the economy's largest sector, shows no signs of being solved.

So, for many, CACEM's "the times they are a-changin'" mood seemed strange.

"Forty-two percent of those interviewed affirmed that sales have increased from the same period in 2008," says the report, and nearly half said, more optimistically, that sales will increase in 2009's final months. Fifty-five percent of retailers and 50% of alcoholic beverages manufacturers estimate sales will increase in 2010, it adds. The forecast includes a 29% of optimistic opinions in the pharmaceutical industry and a 21% in the food industry as well.

That's it for the most "optimistic" part of the report. In the following paragraphs, CACEM's analysts get real: "Although there is general agreement among different sectors in relation to the economic situation, no changes are expected for 2010, but a significant improvement within three years [is expected]." For the most part, it seems, optimism is a faraway thing.

So, the question remains: Was there at least a glimpse of wishful thinking in the report's initial statement?

I asked CACEM chief analyst Fidel La Riva to explain: "The optimism marked on the survey's results are based mainly on two elements: first, according to the economic situation of the brand or product category in which the respondents were involved, where a little more than two-thirds of the respondents state that this remained the same or better than the same period last year."

"And the second factor to consider," he continued, "are the future expectations to one year and three years, which clearly establish an expectation [of a] rather optimistic scenario -- especially in the three years -- where the expectation of 'improvement' borders on 80% of responses interviewed."

Can this optimism be replicated elsewhere in the Latin American region, sending signs of a regional rebound against the pessimism or at least the confusion that still remains in the world?

Not really.

"We must remember that Mexico and Chile have been those who have suffered the most with this crisis, while Brazil, although it was the first affected, is now the first country in the region to show signs of having overcome this economic storm," Mr. La Riva explained.